Many surgical services that formerly could be performed only in hospitals now can be delivered safely and more conveniently in outpatient settings, spurring development of new types of institutions that are competing with hospital outpatient departments (HOPDs). Key among these is ambulatory surgery centers (ASCs), freestanding facilities that specialize in surgical procedures that do not require an overnight stay. ASCs have experienced rapid recent expansion in the U.S. market, and some studies suggest that ASCs actively compete with HOPDs for patients. However, the nature of that competition is unknown. Whether ASCs are having a favorable competitive impact on the market for outpatient surgeries is an important economic question. There is no publicly available information about what prices ASCs receive from commercial insurers. Nor are ASCs required to submit cost reports to the Centers for Medicare and Medicaid Services. In order to better understand the role of ASCs in the market for outpatient surgery, this project examines the dynamics of price competition for common surgical procedures. It is premised on the notion that higher prices are driving higher U.S. health care spending. The focus is on privately negotiated prices for surgical procedures that are performed in ASCs. The aims are twofold: 1. Compare private insurance market prices for surgical procedures performed in ASCs with: a) Private insurance market prices for the same surgical procedures when performed in HOPDs b) Medicare payments for the same surgical procedures when performed in ASCs 2. Investigate the competitive market effects of ASCs by addressing these questions: a) Are prices for surgical procedures performed in HOPDs lower in markets where there is greater competition from ASCs? b) What market characteristics are associated with greater variation in ASC and in HOPD prices? The project uses descriptive, statistical and econometric techniques to explore actual transaction prices for common procedures that are performed in high volume in both ASCs and HOPDs. Understanding relative prices across provider types, payer types, and under different market conditions will be informative to policymakers in better understanding of whether the growth of ASCs is contributing to higher spending for surgical services.